Summit Drywall Inc. ordered to pay $550,000 to settle federal labor lawsuit
February 21, 2014
NEW — 6 a.m. Feb. 21, 2014
An Issaquah drywall contractor has agreed to pay $550,000 to settle a U.S. Department of Labor lawsuit that alleged the company cheated nearly 400 workers out of overtime wages over a three-and-a-half year period.
Summit Drywall will pay $275,000 in back wages and another $275,000 in damages to workers who were illegally denied overtime compensation from October 2009 to April 2013, the labor department said Feb. 20.
About 380 current and former employees will receive money from the settlement, made final by a consent judgment in federal district court in Seattle.
Investigators found that drywall hangers and tapers were paid on a “piece-rate” basis and not compensated for all of the hours they worked, including time spent traveling between job sites and transporting equipment.
“In this region, long hours and low wages are prevalent in the drywall industry,” Janet Herold, the department’s regional solicitor in San Francisco, said in a statement. “This consent decree sends the unambiguous message that the department will not permit the underpayment of workers’ wages in piece-rate schemes.”
Under a piece-rate compensation system, workers’ pay is based on the quantity and quality of their output. While legal, it cannot be used to avoid paying workers at least minimum wage, or proper overtime premiums, said Donna Hart, district director for the department’s Wage and Hour Division in Seattle.
Summit Drywall employees regularly worked more than 40 hours a week, yet were not paid time and a half as required by the Fair Labor Standards Act, she said.
“Employers must keep accurate records, and they must count hours, even if they’re paying on a piece-rate basis,” she said.
Overtime-pay violations are common in piece-rate compensation systems, she added, “unless employers are very careful to comply with the law.”
Summit Drywall owner Thomas Kauzlarich did not immediately return a phone call seeking comment Feb. 20.
He’s required to pay the $550,000 within 70 days. Individual payouts will range from $150 to $4,000 per worker, Hart said.
As part of the settlement, Summit Drywall also must train employees about their rights under federal wage and hour laws. In addition, the company will write an article for a trade publication about an employer’s obligations under the Fair Labor Standards Act.
By Amy Martinez, Seattle Times reporter: 206-464-2923 or email@example.com.